More than 100,000 homes could disappear from the rental market in Spain, a warning issued by Tecnocasa in conjunction with Pompeu Fabra University (UPF). The alert comes from a study that examines how the new housing law might reshape rental availability across the country.
The authors of the study argue that rent limits in distressed areas (22%) and high legal uncertainty (66.3%) may prompt many owners to withdraw their properties from the rental market and seek other uses or opportunities. The result would be a reduction of more than 108,500 homes currently offered for rent, equating to an 11.7% nationwide squeeze on rental supply.
According to the research, when existing lease agreements expire, 7.7% of homeowners are considering selling, while 4% are weighing other avenues, including renting for non-residential purposes.
Barcelona and Madrid most affected
The study projects a 12.6% drop in rental stock in Barcelona, amounting to 24,090 fewer properties, and an 11.3% decline in Madrid with 43,113 fewer homes. The hardest hit areas show a sharper pullback in Barcelona’s Eixample district, where supply could fall by over 16%, and in central Madrid, where supply could drop by 14.6%. Legal uncertainty looms large for Madrid landlords (about 70.9%), while rent caps in stressed Barcelona neighborhoods weigh heavily (around 63%).
These figures come from the study titled “The Impact of the New Housing Act on the Rental Property Offer,” produced by Tecnocasa Group in collaboration with UPF, drawing on data for the first half of 2023 and presented at UPF’s Barcelona campus, home to 37 prior editions of their housing market reports.
Stability in used housing
Lázaro Cubero, Analysis Director at Tecnocasa Group, notes a stabilization in Spain’s used housing market, with a modest 0.21% rise in the first half of 2023, bringing the average price to 2,377 euros per square meter. Barcelona continues to hold the highest price level at 3,145 euros per square meter, while Talavera de la Reina remains the lowest at 651 euros. Malaga shows the most notable quarterly rise, up 8.84% to 1,920 euros per square meter, and Madrid stands at 2,794 euros per square meter.
Turning to mortgages, the first half of 2023 saw an average loan value of 121,782 euros, down 2.7% from the previous year. Mortgage amounts peak in Barcelona at 145,883 euros, followed by L’Hospitalet de Llobregat at 135,788 euros and Madrid at 130,525 euros. Malaga records the lowest average mortgage, at 94,471 euros.
Rent threshold
The loan-to-value ratio reached 80% in early 2008 and stood at 68% in the first half of 2023, one of the lowest levels in the historical series. The ratio of monthly mortgage payments to the borrower’s income stood at 35% during the reviewed period, the maximum recommended level to minimize default risk and the highest since 2011.
Bank lending conditions reflect ongoing conservatism: about 82% of new mortgage loans have indefinite contracts, only around 5% have temporary contracts, and the average mortgage maturity is 28 years, well short of the 35-year horizon seen in 2007.
Technocasa’s chief executive, Paolo Boarini, highlighted notable shifts in mortgage products over the past six months. Mixed-rate mortgages have more than doubled, rising from 14% in the first half of 2022 to 30% of total mortgage activity in the first half of 2023. Fixed-rate loans, which accounted for 83% of activity in the first half of 2022, now represent about 51% of mortgages issued in the first half of 2023.
During the first half of 2023, average interest rates on variable-rate housing loans averaged 4.92%, while fixed-rate loans averaged 3.25%. In the period under review, monthly payments were about 620 euros for variable-rate loans and 560 euros for fixed-rate loans, with variable-rate payments rising by roughly 46% and fixed-rate payments by about 28% year over year.
Cubero’s analysis of the rental market shows price growth across many areas, with Valencia up 14.3%, Barcelona up 11.9%, and Madrid up 8.6%. The highest per-square-meter price remains in Barcelona at 16.5 euros, underscoring regional price dynamics within the national trend.